Day 1 of Water 2014

Yesterday saw day one of Water 2014, where the great and good of the water industry joined some of us mere mortals to discuss issues of infrastructure, deregulation, data and technology, and putting the customer at the heart of both our businesses and our operations.

With the benefit of a night’s sleep to assemble the highlights, it is interesting to note that the themes are similar to previous conferences, and that perhaps not much has changed. However, as Tony Conway (Strategic Programmes Director, United Utilities) observed, we are in the midst of the greatest change in 30 years and at the greatest pace.

The forthcoming splitting of retail and wholesale divisions is clearly occupying the minds of the Chief Execs with issues of competition law and compliance ringing out. The focus, within AMP 6, on outcomes was universally welcomed and has resulted in a fusion of operational expenditure and capital expenditure to one overall consideration of TOTEX with considerations for the whole life cost of assets. This should encourage investment in the asset base – with replacement running as low as 0.8% of assets currently, this can only be a good thing. We only had to listen to Jerry Grant (Head of Asset Management, Irish Water) to understand the importance of maintaining assets, with 50% of sewage treatment works currently non-compliant and almost 50% of drinking water lost due to leakage on his network.

The structural changes have given a need for new thinking and innovation, according to Peter Simpson (CEO Anglian Water) and this theme was explored in many presentations. Heidi Mottram (CEO Northumbrian Water) even commented that the industry is “pretty good at innovation” a point disputed by other speakers and by delegates over coffee; Tony Conway recognised the ‘gloopy middle’ slowed innovation, even preventing it entirely, whilst Chris Watson (Head of Asset Planning, Northumbrian Water) felt that there was a greater need to conform than to be different and this restricted both our thinking and innovation as an industry.

So the issue is how do we embed innovation and change within the middle management cohort, Tony’s ‘gloopy middle’ of the water industry? Sadly, no answers shared there yesterday, but clear pointers to a different, technology-led future, with smart meters leading the charge for demand management and customer involvement in their consumption patterns, meaning that we will see change continuing unabated.

Einstein is attributed with saying that the definition of madness is to do the same thing repeatedly whilst expecting a different outcome. Given the importance of the water industry to our daily lives, to society at large, there is unquestionably a need to do things differently, whether that’s to be better operationally (outcome measures), to be more efficient (reduce customer bills) or to behave more sustainably (long-term shareholder and stakeholder value) and these huge changes are going to need a different approach – innovation! Looks to me like being ‘pretty good’ won’t suffice if we are to prevent the madness of not changing. Let’s see what day 2 holds…